Government makes concessions to Labour rebels over welfare reforms

The government has made an offer to rebel Labour MPs over its controversial welfare reforms, Sky News understands.

More than 120 Labour MPs were poised to vote against the Universal Credit and Personal Independence Payment (PIP) Bill on Tuesday.

The changes come after a ring-around by cabinet ministers failed to bring rebels on side.

The bill was intended to restrict eligibility for the PIP - the main disability payment in England- and limit the sickness-related element of universal credit, to help shave £5bn off the welfare budget by 2030.

Politics latest: Government to make offer to rebels

'We have listened'

A spokesperson for Downing Street said: "We have listened to MPs who support the principle of reform but are worried about the pace of change for those already supported by the system.

"This package will preserve the social security system for those who need it by putting it on a sustainable footing, provide dignity for those unable to work, supports those who can and reduce anxiety for those currently in the system.

"Our reforms are underpinned by Labour values and our determination to deliver the change the country voted for last year."

Liz Kendall, the welfare secretary, said in a letter to MPs there would be two changes to the bill, including ensuring that all of those currently receiving PIP "will stay within the current system.

"The new eligibility requirements will be implemented from November 2026 for new claims only," Ms Kendall said.

"Secondly, we will adjust the pathway of Universal Credit payment rates to make sure all existing recipients of the UC health element - and any new claimant meeting the severe conditions criteria - have their incomes fully protected in real terms."

Sky News political editor Beth Rigby was earlier on Thursday told existing PIP claimants will be able to keep their payments, which means 370,000 people will not lose out.

This will cost the government at least £1.5bn, according to the Institute for Fiscal Studies.

Sky News understands that a senior source has accepted the change, but it will be up to each individual rebel to make a decision on whether to withdraw.

Read more:
Welfare bill: A humiliating blow for Starmer

The source said they think the changes are a "good package" with "generous concessions".

A reasoned amendment signed by 126 Labour MPs argued that disabled people had not been properly consulted and further scrutiny of the changes is needed. If passed, this would have killed the bill.

Sky News understands that some senior rebels are willing to accept the concessions - with one saying that "the concessions will be positively received, and I expect to vote with the government now".

Other MPs who had not wanted to rebel were also expecting to change their votes.

However, several Labour MPs on the left of the party have gone public to say they will still oppose the government, including Diane Abbott, Richard Burgon, Nadia Whittome and Brian Leishman.

Conservative shadow chancellor Sir Mel Stride said the change would mark a "screeching U-turn" - and claimed the changes mark "another unfunded spending commitment".

Meanwhile, Helen Whately, shadow work and pensions secretary, said: "This is another humiliating U-turn forced upon Keir Starmer.

"With the sickness benefits bill set to reach £100 billion by 2030 the country needs action. But Labour has lurched from a bad plan to a next-to-nothing plan.

"The latest 'deal' with Labour rebels sounds a lot like a two-tier benefits system, more likely to encourage anyone already on benefits to stay there rather than get into work."

What is PIP?

The biggest shakeup to the system involved changes to PIP - money given to people, including some of whom are in work - who have extra care needs or mobility needs as a result of a disability.

People who claim it are awarded points depending on their ability to do certain activities, such as washing and preparing food, and this influences how much they will receive.

From November 2026, people would have needed to score a minimum of four points in at least one activity to qualify for the daily living element of PIP - instead of fewer points spread across a range of tasks.

This would have impacted existing claimants as well as new ones. The government's concessions are understood to see this change dropped for existing claimants.

Universal credit

The government intended to freeze the health element of universal credit, claimed by more than two million people, at £97 a week during this parliament, and cut the rate to £50 for new claimants.

Again, it's understood the government's concessions mean this change now won't apply to existing claimants.

(c) Sky News 2025: Government makes concessions to Labour rebels over welfare reforms